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A senior adviser to Mahmoud Abbas, the Palestinian president, has accused Australia’s prime minister, Scott Morrison, of destroying the chances of Middle East peace in order to win a byelection, after Morrison said he might recognise Jerusalem as Israel’s capital.

Nabil Shaath said on Tuesday that Palestinian officials were now lobbying Arab countries to reassess their trade and political ties with Canberra, hours after diplomats from 13 Middle Eastern and North African embassies in Australia held an emergency meeting on the issue.

After Donald Trump’s move, Morrison announced on Tuesday that he was considering relocating the Australian embassy from the coastal city of Tel Aviv to Jerusalem and declaring the city as the Israeli capital.

Moving Australia’s embassy to Jerusalem a ‘fatal mistake’, Middle Eastern envoys warn
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Within hours, the speech had also drawn ire from two of Australia’s key regional neighbours – Indonesia and Malaysia, both Muslim-majority countries. Jakarta expressed “strong concern”, while Malaysia’s prime minister-in-waiting, Anwar Ibrahim, said Australia could jeopardise its relations with Asian countries.

Morrison’s Liberal party faces a potential byelection upset in what was previously considered a safe seat in the key Sydney electorate of Wentworth. If his party does not win, the coalition government will lose its one-seat majority in parliament.

The Liberal party candidate for Wentworth, Dave Sharma, denied that the announcement, which signals the reversal of a 70-year foreign policy stance by Australia, is connected to the byelection in the area of about 100,000 voters.

However, Wentworth is home to a sizeable Jewish population and Morrison credited Sharma – also a former ambassador to Israel – for convincing him that the embassy move was a “sensible suggestion”.

In the Palestinian city of Ramallah, Shaath, a former foreign minister, said Morrison’s announcement was a hostile action that destroyed the chances of peace.

“This doesn’t really help. It might increase the chances of the government winning Wentworth in Australia,” he said. “But if this is the way you do politics in the Middle East in order to win a byelection in Australia, then please allow me to be very negative towards the policy of that Australian government.

“We’ll do our best that it will cause damage to Australia’s relations with the Arab world … This is a policy that brings nothing but ruin.”

Of all the issues in past failed peace efforts, none have been as sensitive as the status of Jerusalem. As well as the West Bank and Gaza, Israel captured the eastern side of the city in 1967 from Jordanian forces. It later annexed those neighbourhoods where thousands of Palestinians live, to global condemnation.

International consensus has been that Jerusalem’s status should be settled in a peace deal and recognising it as a capital for either side would prejudice one party over the other. If Australia went ahead with the move, it would join just the US and Guatemala, who also relocated their embassy this year.

A Christian evangelical, Morrison came to power in August on the back of a revolt by conservatives in the Liberal party. Israel’s prime minister, Benjamin Netanyahu, has looked to evangelicals for support as many see Jerusalem being Israel’s capital as consistent with biblical prophecy of the second coming of Jesus and the Rapture. However, Morrison denies his religion was a factor in his decision on the issue.

Amid the diplomatic fallout, Morrison and his foreign minister released a joint statement saying that any decision would be “subject to a rigorous assessment”. Australia was committed to a two-state solution, it said, and an embassy move would not block Palestinian claims over the eastern part of the city.

It said Sharma had suggested recognising Jerusalem as Israel’s capital, “without prejudice to its final boundaries, while acknowledging East Jerusalem as the expected capital of a future Palestinian state. Specifically, the government will examine the merits of moving Australia’s embassy to West Jerusalem.”

Shaath disputed this. “Claiming that considering Jerusalem the capital of the state of Israel and moving the Australian embassy to Jerusalem will contribute towards a regional peace process between the Israelis and the Palestinians? What logic is this?” he said.

New Zealand’s prime minister, Jacinda Ardern, also said the proposal would not help Middle East peace. “We support a two-state solution and our view has been that any shift in representation, in the way we saw with the United States, does not move us closer to that peaceful resolution,” she said.

Morrison said the government would review the Iran nuclear deal, an Obama-era pact that Trump ditched – and Netanyahu has been pressing other countries to drop it. The move would put Australia at odds with European signatories who back the agreement, which aims to curtail Iran’s nuclear ambitions.